“No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.”
The Delhi High Court has held that the power to order the attachment of bank accounts under the Central Goods and Service Tax (CGST) Act, 2017 is only on the commissioner.
The petitioner Vikas Enterprises has filed the present petition impugning a communication dated 25.03.2022 (‘the impugned communication’), issued by respondent no. 2 [Superintendent (Anti-Evasion) Group 1] to the Branch Manager, State Bank of India, Indraprastha Building, Vikas Marg, Lakshmi Nagar, Delhi, calling upon the bank to furnish certain documents about the petitioner. The said impugned communication further directed the bank not to permit any debit from the petitioner’s bank account (Account No. 39617476186) maintained with the said bank without prior permission of the Department.
Mr. Ojha, counsel appearing for the respondents is unable to point out any provision under the Central Goods and Services Tax Act, 2017 (‘the CGST Act’) permitting respondent no. 2 to issue such a communication directing the Bank to freeze the bank account. He has referred to the provision of Section 83 of the CGST Act, which empowers the Commissioner to issue an order for provisional attachment of assets including bank accounts.
However, an order of provisional attachment of assets under Section 83 of the CGST Act can be issued only if the Commissioner is of the view that it is necessary to protect the interest of the Revenue. It was evident that the Commissioner has not issued any such order.
It is well settled that the orders of provisional attachment of bank accounts or other assets of a tax payer have a serious adverse effect on the business of the taxpayer. In Radha Krishan Industries v. State of Himachal Pradesh & Ors. (2021) 6 SCC 771, the Supreme Court held that “the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.”
The petitioner had filed his objection in terms of Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (hereafter ‘the CGST Rules’) assuming that the impugned communication was passed under Section 83 of the CGST Act.
A division bench comprising Justice Vibhu Bakhru and Justice Mr Amit Mahajan set aside the impugned communication to the extent that it seeks to place a debit freeze on the petitioner’s account. Further, the respondents are required to act by the statutory provisions.
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